Oceanus Prison is, as the name suggests, in the middle of the Southern ocean.
Made in the middle of the Celestial-Demon War, Oceanus Prison was designed to keep all humans kept there (Mobian prisoners were used as slaves.) out of the war permanently. After the Mobian Uprising, sealing the majority of Demons and Celestials into scepters and staffs, the prison fell out of use. However, when Dr. Eggman found it, it had an intact Dark Matter Reactor and operating robots. All Eggman had to do was reprogram the main computer for his own purposes. He threw humans in, while areas were made for Mobians.
Point of interest
Dark Matter Reactor
Airfield with three Egg Phoenixes on standby
Lack of cells
Just because there are cells, doesn't mean the people are kept in them. In fact, only dangerous prisoners who tried to either escape were kept in there. Most of them slept in massive communal dorms, used communal bathrooms and ate in communal cafeterias, before being sent outside where the spent the rest of their time, even if it was raining. Some of the prisoners worked on 'a massive space-plane', although Eggman only revealed the Egg Shuttle when probed by a scientific body.